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US annual PPI dropped to 8.7%


US stocks rebounded higher on Wednesday, regaining bullish momentum after swinging between gains and losses throughout the day amid the falling US Producer Price Index. The US annual PPI declines to 8.7% in August, which fell at a stronger pace than expected and showed that the supply chain headwinds are easing. The moderate figure has eased the jitters about the aggressive rate hike moves by the Federal Reserve in the next meeting, meanwhile providing some support to the equity markets. As for now, the Retail Sales due on Thursday and Friday’s Michigan Consumer Sentiment report will be the key focus as investors will look for clues on the strength of the economy and inflation expectations.

In the Eurozone, the weakness in Germany has spread toward other larger economies as the Industrial Production fell 2.3% MoM in July, which came weaker than expected and showed the deterioration in the bloc’s economy. An ECB 75 bps rate hike in October is expected by the money market.

The benchmarks, S&P 500 and Dow Jones Industrial Average both edged higher on Wednesday as the falling US dollar and emerging dip buyers both sent the S&P 500 into the green at the close. The S&P 500 was up 0.3% daily and the Dow Jones Industrial Average was little changed for the day. Six out of eleven sectors in the S&P 500 stayed in positive territory as the Energy and the Consumer Discretionary sectors are the best performing among all groups, rising 2.85% and 1.30%, respectively. The Nasdaq 100 meanwhile climbed the most with a 0.8% gain on Wednesday and the MSCI World index was down 0.3% for the day.

Main Pairs Movement
The US dollar edged lower on Wednesday, remaining under bearish pressure and retreated to a daily low below the 109.30 mark amid the slightly improving market mood. But the US dollar index has rebounded back in the US session as the expectations for a hawkish Federal Reserve outcome next week should limit the losses for the greenback. Wednesday’s inflation data indicated that the producer prices index (PPI) declined for a second straight month in August as gasoline prices fell further.

GBP/USD advanced higher on Wednesday with a 0.40% gain as the lower-than-expected UK Consumer Price Index (CPI) data has provided support to the cable. On the UK front, the lower CPI reading has come as a sigh of relief for the UK economy amid the severe pain of sky-rocketing energy bills. Meanwhile, EUR/USD also slightly recovered from yesterday’s losses and refreshed its daily high near the 1.002 level. The pair was up almost 0.15% for the day.

Gold was back under pressure with a 0.30% loss for the day after dropping to a daily low below the $1,694 mark during the late US session, as the US dollar attempted a comeback and exerted selling pressure on the safe-haven metal. Meanwhile, WTI Oil advanced higher with a 1.58% gain for the day and refreshed its daily top above the $90 mark.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
AUDEmployment Change (Aug)09:3035K
USDCore Retail Sales (Aug)20:300.1%
USDInitial Jobless Claims20:30226K
USDPhilidelphia Fed Manufacturing Index (Sep)20:302.8
USDRetail Sales (Aug)20:300.2%